Mid West Ports Authority - ANNUAL REPORT 2014 / 2015 ... Authority was renamed the Mid West Ports Authority

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  • ANNUAL REPORT 2014 / 2015

  • Mid West Ports ABN 73 384 989 178

    Street Address 298 Marine Terrace, Geraldton Western Australia 6530

    Postal Address PO Box 1856, Geraldton Western Australia 6531

    Telephone: +61 8 9964 0520 Facsimile: +61 8 9964 0555

    Internet: www.midwestports.com.au E-mail: mail@midwestports.com.au

    Board Directors IAN KING Chairman

    NOEL ASHCROFT AM Deputy Chairman

    BART BOELEN

    STEVE CHAMARETTE

    KIM HALBERT

    Executive Officers PETER KLEIN Chief Executive Officer

    DAVID GELDART General Manager - Corporate Services

    LINDSAY MORRISON General Manager - Landside Operations

    MARTIN NORTH Harbour Master/Marine Manager

    BEN MYNOTT HSEQ Manager

    2

  • ANNUAL REPORT 2014 / 2015

    Contents From The Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

    Chief Executive Officer Report . . . . . . . . . . . . . . . . . . . . . . . . . 5

    2014/15 Performance Highlights . . . . . . . . . . . . . . . . . . . . . . . 8

    Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

    Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

    Organisational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

    Purpose and Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

    Report on Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

    Record Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

    Comparative Trade Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

    Origin and Destination of Cargo . . . . . . . . . . . . . . . . . . . . . . . 29

    Organisational Performance - 2014/15 . . . . . . . . . . . . . . . . . 30

    Financial Report

    Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

    The directors present their report together with the financial report of Mid West Ports Authority (“the Authority”) for the year ended 30 June 2015 and the auditor’s report thereon.

    Directors’ meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

    Principal activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

    Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

    Operating and financial review . . . . . . . . . . . . . . . . . . . . . 39

    Significant changes in the state of affairs . . . . . . . . . . . . 39

    Events subsequent to reporting date . . . . . . . . . . . . . . . 39

    Likely developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

    Directors’ emoluments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

    Environmental regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . 40

    Environmental management . . . . . . . . . . . . . . . . . . . . . . . 41

    Rounding off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

    Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . 42

    Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . 43

    Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

    Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . 45

    Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . 46

    Directors’ Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

    Independent Audit Report of the Auditor General . . . . . . 72

    3

  • From the Chairman On 1 July 2014 Geraldton Port Authority was renamed the Mid West Ports Authority to reflect the planned expansion of its responsibilities to Cape Cuvier, Useless Loop and Oakajee. I am pleased to report that the Authority’s first full year of operation has been safely and successfully completed. Total trade of 16.9 million tonnes enabled the Authority to achieve all of its

    operating and financial targets.

    Management System The cornerstone of the Authority’s governance is its integrated management system. This system is under continuous review and improvement and is overseen by the organisation’s highly professional health, safety, environment and quality (HSEQ) management team. The system’s compliance with AS/NZS 4801, ISO 14001 and ISO 9001 was again confirmed by external third party audit.

    I am also pleased to report that the Office of Rail Safety reconfirmed the Authority’s accreditation as a Rail Infrastructure Manager and for the first time provided accreditation as a Limited Rail Operator which will facilitate future maintenance works within the rail terminal. The provision of rail terminal management services have also been restructured for more efficient delivery of this service.

    The Board receives safety and environmental management reports on a monthly basis and is briefed on incidents and investigation outcomes. Operations during 2014/15 were fully compliant with the Authority’s Environmental Licence issued by the Department of Environment Regulation. Two lost time injuries were incurred by an Authority’s employee and a major contractor.

    Ports Governance Review Although a smooth transition to Mid West Ports Authority has occurred there is considerable on-going work to transfer the marine services provided by the Department of Transport at the ports of Cape Cuvier and Useless Loop. These ports are both single user ports operating under the guidance of State Agreements.

    The marine safety function at these ports is planned to transfer from delivery by the Department of Transport under the Shipping and Pilotage Act to delivery by the Authority under the Port Authorities Act. This change is presenting a number of administrative & legal challenges that have been identified and documented by the Mid West Ports Amalgamation Working Group.

    The Authority continues to work closely with both the Departments of Transport and State Development to find solutions to these challenges and to address other outstanding actions and remains hopeful that the responsibilities will transfer in a timely way.

    The Authority has been a strong supporter of the State Government’s efforts to establish a viable port operation at Oakajee. However, over the last 12 months project developments have pushed the prospects for this project further out and this has been further influenced by lower iron ore prices and consequential impacts on mining proponents. The Authority continues to monitor developments and stands ready to support the project should interest be renewed.

    A comprehensive port master plan has been developed along with an operating model and draft agreements which collectively positions the State for effective future reengagement with proponents on this project.

    4

    IAN KING Chairman

  • ANNUAL REPORT 2014 / 2015 5

    Port Charges Review During the course of 2015, the Authority’s port charges, particularly the Port Enhancement Charge have come under pressure from some customers and this has resulted in the Department of Finance announcing in May 2015 an independent review of port charges which are levied by the Authority.

    Earlier, in October 2014, the State Government released for the first time its Port Improvement Rate Policy. This Policy provides for a port authority to implement a dividend neutral charge to either service debt or to generate capital for qualifying works. Currently, port authorities are required to pay 65% of their net profit after tax as a dividend to the State Government and the reinvestment of this dividend under the Port Improvement Rate Policy enables a port authority to repay debt or build a capital reserve far more efficiently than would otherwise be the case.

    The $106M Port Enhancement Project was 100% debt funded with financing arranged through the Western Australian Treasury Corporation. The Corporation arranged a number of tranches of debt with a variety of settlement dates out to 2034. After the Port

    Improvement Rate Policy was released the Authority developed a proposal to convert the current Port Enhancement Charge into a dividend neutral Port Improvement Rate along with some consequential amendment to the standard (non-PEP) charges.

    The Authority looks forward to the Department of Finance’s port charges review being concluded and is hopeful that the outcomes when implemented will result in sustainable port charges and a beneficial outcome for the port’s important customers.

    Business Development The Mid West region has benefited from more than $1B of private and public investment in port and transport infrastructure over the last 10 years. This investment has facilitated a run of 8 successive years of record trade growing from handling 4.3 million tonnes in 2003/04 to 18.4 million tonnes in 2013/14, an overall trade increase of 328%.

    Unfortunately, the current iron ore price is putting pressure on the region’s producers and on the viability of expansion projects. This effect has resulted in a 7% decline in iron ore exports during 2014/15 and reduced the likelihood of near term capacity

    constraints and the pressing need

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